Economic Report (June 2010)

All information reflects the latest available data

OVERVIEW

Azerbaijan has taken 38th position in the Doing Business 2010: Reformers in Difficult Times league table, issued by the World Bank (WB) and International Finance Corporation (IFC). The study involved 183 countries.

According to the report, Azerbaijan undertook effective reforms during 2008–09, particularly regarding such sectors as receiving loans and international trade. Efficient reforms have facilitated the realisation of new ventures and increased the efficiency of commercial transactions.

The report explained that: “Azerbaijan has set the goal of becoming a gateway to the region.” It recognized that the business climate in the country has been significantly improved by simplifying business registration, as the principle of a ‘single window’ in the Taxes Ministry was introduced in 2008; goods and vehicles now pass through the customs checkpoint, simplified this year by the ‘single window’; improved taxation legislation has been developed; and enhanced property registration measures have been implemented.

In the 2008 report, Azerbaijan also ranked 38th, this time out of 96 countries. That year, it achieved an unique improvement in its rating, confirming its position as a leader in economic reform. The rating takes ten areas into account – launching a business, construction permissions, human resources policy, property registration, loan receipts, protecting investors’ interests, taxation payments, registration of export–import operations, contract fulfillment, and business closure legislation.

Azerbaijan significantly improved its position on seven of the 10 criteria covered in the new report. For example, it ranked 64th according to the ‘launching business’ criterion last year, but reached 13th in 2010; it also achieved a ranking of ninth in the ‘property registration’ stakes, yet ranked 56th in the previous report. The most impressive development related to ‘protection of investors’ interests’, where Azerbaijan ranked 18th, occupying 107th position last year.

INDUSTRIAL DEVELOPMENT

Throughout the Soviet period, Azerbaijan was always more industrially developed than Georgia and Armenia, two neighbouring Transcaucasian countries. With a history of industrial development extending across more than a century, Azerbaijan proved itself as a leading nation in the South Caucasus throughout the turmoil of the Soviet Union collapse.

Oil remains the most prominent product of the Azerbaijani economy, with cotton, natural gas and agricultural products contributing to its economic growth over the last five years. More than $60bn (£36.6bn) has been invested in Azerbaijani oil by the participating companies in the Azerbaijan International Operating Company (AIOC) consortium, led by BP. Oil production under the first of these production-sharing agreements (PSAs) began in 1997.

Energy resources have brightened the long-term prospects for the country, economic reform has progressed, and old economic ties and structures are being replaced. Trade with Russia and the other former Soviet republics is declining in importance, whilst it is developing with Turkey, UAE, and the EU. Azerbaijan is also a member of the Economic Co-operation Organisation (ECO).

Sources: Azerbaijan Ministry of Economic Development; The State Statistical Committee of the Republic of Azerbaijan